While the values of cryptocurrencies are booming, many experts in India feel that the government could block access to the invested money in the future. The warning issued last week by the Reserve Bank of India (RBI) against investment in cryptocurrencies could very well be an indication of this.
The meteoric rise of bitcoin value over the last few months has made many investors jump the cryptocurrency bandwagon. However, the multiple threats looming over cryptocurrencies make this a risky investment according to many investment experts in the country.
Lack of regulatory supervision is one of the major threats to this type of investments. As of now, there is no outright ban on investment in cryptocurrencies. If there is a ban in the future, investors will have a hard time accessing their invested money.
One of the reasons for the ongoing cryptocurrency boom is the speculative investment of people looking to make quick money. Most importantly, many investors are currently investing in bitcoin and other cryptocurrencies without even understanding how these currencies work. With this type of speculative investment, there are raising concerns that the value of bitcoin may crash anytime.
Though the value of bitcoin has reached record levels, the price is highly unstable with changes to the tune of thousands of dollars every week. In this highly volatile market, experts are predicting that investors are in for a huge risk of losing their hard-earned money.
The warning issued by RBI last week reflected many of these concerns. RBI compared this ongoing bubble to a Ponzi scheme that might cause investors to lose their hard-earned money. A few weeks ago, the government also raided many bitcoin exchanges to investigate the possibility of tax evasion.
In addition to lack of regulatory supervision, there are also many other concerns associated with investment in cryptocurrencies. For instance, cryptocurrencies are not backed by any physical assets and they are vulnerable to hacking. Considering all these issues, the expert opinion remains negative for investment in bitcoins.
BankBazaar urges its readers to take extreme caution before trading, mining or investing in virtual currencies. BankBazaar does not endorse cryptocurrencies or making investments in cryptocurrencies in any manner. Our only goal is to provide information to our visitors about cryptocurrencies. We advise our readers to consider investing in Mutual Funds, Fixed Deposit, ULIPs and other legally recognised investment avenues rather than risking their capital on extremely volatile and unregulated assets like cryptocurrencies.
The Reserve Bank of India (RBI) issued a Press Release on December 24, 2013, cautioning users, holders and traders of virtual currencies including Bitcoins regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with virtual currencies. RBI has also clarified vide press release dated February 1, 2017 that it has not given any licence/authorisation to any entity/company to operate such schemes or deal with Bitcoin or any VC.
The Ministry of Finance issued a statement on December 29, 2017 stating that virtual currencies are not legal tender. Mr. Arun Jaitley in his budget speech on February 1, 2018 has clearly stated that the Government does not consider cryptocurrencies legal tender or coin.
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